SAARC REGIONAL MULTIMODAL TRANSPORT STUDY (SRMTS) PHASE II. AVIATION Amal S. Kumarage Professor, University of Moratuwa, Sri Lanka

Transcription

1 SAARC REGIONAL MULTIMODAL TRANSPORT STUDY (SRMTS) PHASE II AVIATION Amal S. Kumarage Professor, University of Moratuwa, Sri Lanka April 2006

2 1 Present Status of Aviation Travel within SAARC Air transport has been the fastest growing mode of transport over the last few decades in most parts of the world. It has made vast advances in both passenger as well as cargo transport. The present state of air transport in the SAARC region compared to world travel as given by the International Civil Aviation Organization (ICAO) is shown in Table 1. Table 1 : Share of Worldwide Aviation in SAARC Region 2004 All Countries SAARC Region % International Passenger Movements (million) 1, Regional Passenger kms (billion) Regional Freight Movements (tonnes 000 s) 23, Note: ICAO record 593 million international passengers carried, assuming 50% of trips have on average 1 transfer, this would mean 3 trip movements (i.e. initial boarding, final alighting and boarding and alighting at transfer point for 50% of trips) making up an estimated 593x3 movements= 1779 million movements The table shows that the region s share of international passengers is only 1.9%; while that of its regional passengers is even lower at 0.5%. It should be borne in mind that even in this low percentage, a large proportion is made up by tourists and those originally from SAARC countries who are now expatriated and resident in other parts of the world. Thus, travel under taken by residents within SAARC would be actually lower than that indicated in Table 1. Closer inspection shows that per capita indicators given in Table 2, of use of air travel within the SAARC region lags very much behind other regions, even such as Sub Saharan Africa that has a much lower income level compared to SAARC. While appreciating the fact that aviation, similar to other modes of transport, is correlated with increases in incomes, the extremely low indicators of use shows that aviation within SAARC is one of the least developed modes of transport particularly for intra-regional mobility. Table 2: Comparison of Regional Aviation in SAARC with other Regions 2002 Region Intra Regional Passengers Carried (million) Regional Trips Per 1000 Capita Africa Asia/Pacific Europe Middle East North America South America & Caribbean TOTAL SAARC (given within Asia/Pacific above) Comment regarding travel within SAARC region Only 0.5% 1(in 200) of World wide regional traffic Lowest aviation use in the world, lower than sub- Saharan Africa.

3 While domestic air travel is outside the remit of this study, the data available in the country reports show that domestic air travel in SAARC countries is also one of the lowest in the world compared to other regions of similar economic standing. 1.1 Air Services Agreements (ASA) Air Services between countries within SAARC are governed by a number of different bilateral agreements. Most of these are reciprocal in allowing either country to have an equal number of airlines operated to any one or more designated location by any one or more airlines designated by each country. Within the seven countries in SAARC, there can be a maximum of 21 ASAs, if each of the 7 countries was to have ASAs with each of the other 6 countries. Table 3 shows the number of flights per week allowed in the present ASAs in the top right hand triangle of the table, while the weekly number of flights in operation at present is given in the corresponding opposite cell in the bottom left hand triangle of the same table (given in bold italics). The shaded empty cells in the diagonal of the table refer to domestic flights, which are not covered under ASAs and are also not the object of this study. Table 3: Flights allowed by ASAs and presently operated between SAARC Countries (in one direction) Country B desh Bhutan India Maldives Nepal Pakistan Sri Lanka Bangladesh 2 60 X n/a n/a 3 Bhutan 0 49 X 7 X X India *5 (metros) others unlimited Maldives X X 4 X X unlimited Nepal X n/a X Pakistan 4 X 14 X 2 unlimited Sri Lanka 0 X X 5 From Table 3 it can be seen that India has ASAs with all the other 6 countries while Bangladesh, Nepal, Pakistan and Sri Lanka have with 4 other countries and Bhutan has with 3 other countries while the Maldives has ASAs with only 2 other countries. Of the maximum of 21 possible ASAs between these countries, 14 are in place as indicated in Table 3. Each of these ASAs is unique as they are separate bilateral agreements. However, in most cases an equal number of services are allowed to each country. In the case of Sri Lanka, many of the ASAs do not have specific limitations in the number of flights. Moreover, the Prime Minister of India has made an offer in the recently concluded SAARC summit at Dhaka to all other SAARC countries, without any prejudice to the existing rights, the facility of daily services to the six metro cities in India - Delhi, Mumbai, Chennai, Kolkata, Hyderabad and Bangalore - and unlimited access to 18 tourist gateways - Patna, Lucknow, Guwahati, Gaya, Varanasi, Bhubneshwar, Khajuraho, Aurangabad, Goa, Jaipur, Port Blair, Cochin, Thiruvananthapuram, Calicut, Amritsar, Vishakapatnam, Ahmedabad and Tiruchi.

4 This offer is on a reciprocal basis and is to be formalized through exchange of Diplomatic Notes. Acceptance of this offer would significantly open up the bilateral traffic rights between India and other SAARC countries. The steps taken particularly by India and Sri Lanka can be seen as important initiatives in opening up of the regulatory regime towards an eventual open skies policy within SAARC. However, in reality, on many routes the number of flights allowed by the ASAs has not materialized due to the demand levels not been sufficient. In fact, two of these routes have been discontinued with the service between Paro and Dhaka as well as the service between Dacca and Colombo being closed due to commercial non-viability. Routes on which capacity has been reached, such as on Colombo to many Indian destinations, the ASAs have been amended from time to time to accommodate the changing requirements. In each of these service arrangements, the service levels allowed by the bilateral service agreements have not been reached. However, some restrictions apply to the 6 metro cities identified by India namely, Delhi, Mumbai, Chennai, Kolkata, Bangalore and Hyderabad. The Male - Trivandrum service also has capacity demand. 1.2 Routes & Features of Services between Selected Gateways As shown in Table 4, there are a total of 251 intra-regional flights in SAARC. Table 4: Flights per week and passenger per annum between selected aviation gateways (in both directions) Dhaka 2.Paro 3.Delhi 4.Mumbai 5.Chennai 6.Kolkata 7.Trivandrum 8.Bangalore 9.Trichy 10.Cochin 11.Hyderabad 12.Male 13.Kathmandu 14.Karachi 15.Lahore 16.Colombo 1.Dhaka 2.Paro 3.Delhi 4.Mumbai 5.Chennai 6.Kolkata 7.Trivandrum 8.Bangalore 9.Trichy 10.Cochin 11.Hyderabad 12.Male 13.Kathmandu 14.Karachi 15.Lahore 16.Colombo 35,910 16, ,092 31,109 65,098 9,606 9,840 8, ,346 62,750 34,780 81, ,693 16,269 77,476 75, , ,886 80, ,683 13,841 92,889 84,876 48,345 26, , , ,

5 On the bottom-right hand triangular half of Table 4 is a breakdown of the services operated at present between the 16 aviation gateways selected for this study. This shows that there are only 28 direct flight connections between them. After reducing for domestic travel within the country as shown by the shaded cells, it can be observed that only 28 of the other 83 cells are filled with flight details. This means that approximately only 1/3 rd of the selected aviation gateways have direct flight connections between them. Even among the top 8 of the gateways (Colombo, Delhi, Chennai, Mumbai, Male, Dhaka, Karachi and Kathmandu) there are only 15 direct flights from a total of 28 possible connections, which returns a Directness Index of around 54%, as opposed to 100% if all 8 gateways were connected to each other through direct flights. It is only within the top 4 aviation gateways (Colombo, Delhi, Chennai and Mumbai) that there are direct flights between all of them and hence Directness Index of 100%. Moreover, between the 7 SAARC capitals, of a possible 21 direct connections only 9 connections (less than ½) are operative. The Directness Index in this case is a poor 43%. This clearly shows that direct connectivity between the capitals in particular is extremely deficient. Table 5: Passenger Movements and related information on SAARC Corridors From Dhaka Paro Delhi Mumbai Colombo Kathmandu To Flights per week (One way) Passengers in both directions 2004 Passengers in both directions 2001 % Increase of passengers Distance (km) Aircraft kms operated 2004 Passenger kms Carried 2004 Return Economy Fare ($) Fare per km US$ Delhi 2 35,910 13, ,496 31,852,170 $ $0.26 Mumbai 2 16,897 9, , ,568 19,786,387 $ $0.22 Kolkata , , ,232 24,395,359 $ $0.28 Kathmandu 7 31,109 47, ,120 12,910,235 $ $0.27 Karachi 4 65,098 68, , ,024 95,303,472 $ $0.19 Delhi 3 9,606 7, , ,328 12,910,464 $ $0.23 Kolkata 5 9,840 4, ,000 5,411,725 $ $0.35 Kathmandu 3 8,474 5, ,256 4,135,312 $ $0.39 Kathmandu , , ,879, ,060,978 $ $0.17 Karachi 3 62,750 48, , ,968 66,766,000 $ $0.12 Lahore 6 34,780 26, ,168 15,894,232 $ $0.18 Colombo 7 81,406 44, ,444 1,779, ,956,264 $ $0.12 Male 1 1,639 - Kathmandu 2 16,269 21, Karachi 5 77,476 92, ,400 67,404,120 $ $0.11 Colombo 7 75,225 29, ,530 1,113, ,093,485 $ $0.13 Chennai , , ,500, ,045,882 $ $0.13 Trivandrum , , ,280 38,765,700 $ $0.18 Bangalore 7 92, ,768 74,868,534 $ $0.11 Trichy 10 84,876 41, ,600 37,345,220 $ $0.16 Cochin 11 48, ,288 24,268,939 $ $0.16 Hyderabad 7 26,288-1, ,480 30,493,500 $ $0.13 Male , , ,327, ,486,342 $ $0.13 Karachi 5 36,018 30, ,403 1,249,560 86,550,053 $ $0.07 Kolkata 3 36,866 21, ,616 23,704,838 $ $0.20 Bangalore 2 13,841 14,548-5 Karachi 2 17,364 - Trivandrum Male 3 80,140 69, ,352 53,773,605 $ $0.15 TOTAL of Selected 16 Gateways 236 2,227,881 1,612, ,788,432 1,805,182,815 TOTAL of all SAARC Gateways 251 2,301,051 1,640,774 19,534,528 1,834,045,795

6 % in Selected Gateways The top-left hand triangular half of Table 4 gives the number of passengers travelling between two gateways. Each such route is referred to as a corridor. There are 28 such corridors considered in this study. Table 5 shows the details of these corridors. It should be noted that of the 251 weekly return flights operated within SAARC, 236 (or 94%) of flights are made between the 16 gateways that were selected, further justifying the method of selection. As shown in Table 19, these 28 corridors saw airlines operating a total of 18.8 million kms in 2004, carrying 2.23 million passengers and producing a total of 1,805 million passenger kms. The corridors also carried 36,602 tons of freight and produced 36 million freight tonne kms in the same year. This indicates that the average number of passengers in an aircraft is just above 100 and average freight load is 2 tonnes per aircraft movement. As shown in Tables 4 and 5, much of the present demand for passenger travel within SAARC region is confined to routes that have a strong socio-cultural linkages, such as Colombo - Chennai (453,662 passengers) or Dhaka - Kolkata (167,092 passengers). Other strong linkages are Colombo - Male (271,998 passengers) for tourism (which of course is made up of passengers mostly from non-saarc countries) and Delhi - Kathmandu (264,346 passengers) for trade and tourism. These four routes alone make up over 40% of the entire demand for intra-regional air travel within SAARC. The heavy flows between Colombo - Trivandrum (107,683 passengers) is also indicative of the choice of passengers to fly to destinations that are the cheapest (i.e. instead of flying to Chennai) and thereafter taking cheaper surface transport. This traffic, mostly comprising of a wide cross section of people from all walks of life, would possibly have used the Talaimannar - Rameshwaran ferry were it still operational. Intra-regional corridors connecting the major commercial centres such as Mumbai Colombo, Delhi Dhaka, Delhi - Karachi, Dhaka Karachi, Colombo Karachi and Kathmandu - Dhaka are still of moderate traffic levels, ranging between 15,000 to 80,000 passengers per year. This shows that commercial and business travel within SAARC has still not grown to its full potential. As regards freight, the flows on the 28 corridors and the associated service parameters are given in Table 6. The heaviest freight flows are centred on Colombo, which accounts for more than 50% of the intra-regional freight movements. The other gateways handling significant quantities of freight are Delhi, Mumbai and Dhaka. The heaviest freight flows are on the Colombo - Male corridor, followed by Colombo - Chennai. These have flows between 50 to 100 tons per week (both ways) per week. It is possible that these routes could be investigated for full freighter operations, rather than underbelly cargo transport only. Any lowering of costs could lead to new trade opportunities between these gateways. Unfortunately, corridors such as Delhi - Colombo or Kathmandu - Delhi, Bangalore - Kathmandu or Colombo - Bangalore that can only be connected with multi modal transport operations or expensive road transport have not yet developed large trade flows. Perhaps some attention on these corridors might be necessary to exploit the cost-effectiveness of air transport on such routes.

7 Table 6: Flows and associated details for freight flows between selected aviation gateways From To Tonnes 2004 Tonnes 2001 Distance (kms) Growth (%) Tonne kms 2004 Total Cost US$ per ton Freight Rate US$ per Ton km Delhi 1, ,273, Dhaka Mumbai 931 1,008 (8) 1,171 1,090, Kolkata 1,429 2,217 (36) , Kathmandu (27) , Karachi 1,386 2,707 (49) 1,464 2,029, Paro Delhi ,344 12,096 2, Kolkata ,975 1, Kathmandu ,712 1, Delhi Kathmandu 2,742 2, ,448, Karachi , Lahore ,444 1,250, Mumbai Male ,990 Kathmandu Karachi 1, ,348, Chennai 6,107 4, ,530 9,342, Trivandrum 2,301 2,722 (15) 140 Bangalore , Trichy (29) , Colombo Cochin , Hyderabad , Delhi 1, ,160 1,526, Mumbai 1, ,145 Male 9,817 7, ,138, Karachi 2,285 1, ,403 5,489,654 1, Kathmandu Kolkata (44) , Bangalore Karachi Trivandrum Male , TOTAL of the 16 Selected Gateways 36,602 29, ,101,715 TOTAL of all Gateways 36,762 29, ,171,784

8 According to ICAO publications the estimated freight tonnes carried for 2004 on all international routes world wide was 23million tonnes. Thus, the movements within SAARC of 36,602 tonnes make up only 0.15% of this. This amounts to very low utilization of aviation for freight transport. However, it also stems from the fact that trade between SAARC countries also remains far below the desired levels. 1.3 Growth rates of Passenger & Freight Traffic Passenger Tables 5 and 6 also give the passenger and freight growth rates for the period 2001 to On the passenger side, the selected aviation corridors have recorded a healthy growth of 12% per annum, well above the projected averages for any region made by ICAO, the maximum of which is 6.9% for Europe and for Asia/Pacific. The corridors with the highest growth have been those with moderate traffic levels where frequencies have been increased in recent times such as Colombo - Mumbai and Colombo - Trichy. These corridors have been subject to increased competition and have shown annual growth rates of over 30%. The major corridors, as well as those with moderate flows, with the exception of Dhaka - Kolkata and Mumbai - Karachi have also shown relatively high growth rates of 5-10% per annum. The smaller corridors on the other hand have shown mixed results with some growing (e.g. Kathmandu - Varanasi) and other shrinking (e.g. Kathmandu - Bangalore). Freight The freight traffic has also grown at a lesser rate of 7.5% per annum during this period. The largest corridors, namely Colombo - Male and Colombo Chennai, have recorded around 10% growth rates, which indicate the potential for rapid growth in freight traffic as frequencies increase. The other corridors have had mixed results with the large majority experiencing moderate to high growth and a few experiencing moderate decreases. Sri Lankas projected freight growth rate of 12.2% per annum for the period has been cited as the 3 rd fastest in the world according to the ICAO. All this indicates that increasing flights in the region will lead to a rapid growth in freight traffic by air within SAARC. This of course can be further developed by trade agreements and liberalizing trade barriers, which will in turn provide the base for sustaining such growth in the long-term. The recent free trade agreements signed between many of the SAARC countries is timely and an opportune time to harness the potential of existing freight traffic service by air within SAARC and even to venture into all-freighter services. 1.4 Fares & Rates Passenger The unit fare per km of travel between the selected SAARC aviation gateways is shown in Figure 1. The fare rate is computed from the published return economy fare as shown in Table 3. It can be observed that the unit rate decreases with distance as expected. The lowest rates are around US 10 cents per km with the exception of Colombo - Karachi which records US 7 cents. As there are very few discounted fares offered on these corridors, these rates are effectively the market rate. Compared to rates in Northern America and Europe and even in the East Asia, the rate per km is significantly higher for intra regional travel in SAARC. Even when compared to non-saarc international routes, such as Delhi - Bangkok or Colombo -

9 Hong Kong or to most European destinations, it is possible to get fares with much lower unit costs. The competition between airlines has forced the fares lower and many of them offer cut rates fares from time to time. Freight Rate Vs Distance 2.50 cost US$ per tonne-km ,000 1,500 2,000 2,500 3,000 Distance kms (one-way) Figure 1 Moreover, as can be shown from the scatter plot in the figure, there are a set of corridors which are consistently around 50 to 100 percent more than the corresponding fare level for the same distance. The two groups (trend curves) of data points clearly separate corridors associated with particular gateways. The higher priced corridors are most often associated with Paro, Kathmandu, Kolkata and Dhaka. The corridors with the lower unit rates are associated with the busier gateways served by routes with more competition, such as Colombo, Delhi, Karachi and Mumbai. Freight Figure 2 Economy Fare Rate Vs Distance cost US$/km $0.45 $0.40 $0.35 $0.30 $0.25 $0.20 $0.15 $0.10 $0.05 $ ,000 1,500 2,000 2,500 3,000 Distance kms (one-way) For freight traffic the corresponding Figure 2 shows similar trends with Paro, Kathmandu, Kolkota and Dhaka exhibiting higher costs on corridors associated with those gateways. The only exception is the Colombo - Chennai route that is also the heaviest freight corridor which shows 62 cents US where in terms of economies of scale should be lower.

10 The lowest freight rates in the region appear to be around US cents 20 to 25 per tonne km, which when compared to maritime and railway freight charges are still significantly higher. However, these costs are competitive to road transport, especially when there are high costs associated with border crossings and delays. 1.5 External Barriers for the Growth of the Aviation Industry World aviation statistics reveal that approximately 1/4 th of all airline passengers travel within Northern America or within Europe. A further 6% travel within Asia. This means that as economies grow and mature within a regional context, travel within the region also increases. Presently, due to past development trends, which have associated the SAARC region initially with Europe and more lately with East Asia, most airline operations from the selected gateways in SAARC are to these two regions. However, Colombo particularly after Sri Lanka signed of the trade agreements with India has seen a phenomenal increase of around 30% per annum in traffic with India over the last 4-5 years. This clearly indicates the possibility of increasing mobility and connectivity between countries in the region when the barriers to travel and trade are been progressively lifted. There are two areas where the removal of external barriers will boost air travel within the region opening up more gateways, greater access to markets and cheaper costs. These are as follows: Need for streamlining of visa procedures for personal travel within the region, particularly for travel that will generate business and commercial activities. Some countries notably Nepal and Sri Lanka have taken initiatives in this regard, where visas are granted on arrival. The SAARC Visa Exemption scheme has been slowly expanding to cover more categories. However, it still covers only a very small fraction of travellers. This may be expanded so that at least regular bona fide passengers can have a special SAARC Visa obtained from their own governments; and Gradual removal of trade barriers between SAARC countries and free trade agreements between them. 1.6 Aviation Gateways & Hubs Presently, the SAARC region has 20 gateways from which regional travel occurs and a further 5 airports handling sizeable international travel. For a region that has a population of over 1.4 billion, this works out to around one airport per 60 million persons. In mature economies such as Northern America and Europe and more recently in some countries in Eastern Asia and the Middle East, the number of airports has increased drastically. Europe has 91 gateways of a significant size, while Northern America has nearly 100. This means that eventual saturation requirements would be around one airport per 5 million persons. There are in fact 22 airports in the Middle East and 30 in Sub-Saharan Africa indicating a greater accessibility to airports in those regions when compared to SAARC. It is therefore noted that SAARC region will need to embark on a plan to increase the number of airports starting with the 16 potential gateways over the next 15 years. This may be possible through upgrading some domestic airports to regional airports and in turn upgrading some regional airports to international airports.

11 For regional traffic to grow, the numbers of both of these types of airports should increase. Domestic airports increase the accessibility to air travel and international airports can increase the viability of regional airports, as transfers can be undertaken through them. This can most effectively be performed through the development of regional aviation hubs. Presently, travel between those SAARC countries in the south of the region, namely Maldives and Sri Lanka, and those in the northern part of the region, such as Bangladesh, Nepal and Bhutan, is most often done through a hub located outside of the SAARC region such as Bangkok, Doha or Dubai. The identification of such hubs within SAARC is a complex issue and beyond the scope of this report. However, it is possible to consider the following aspects with respect to features of a hub in order to initiate some studies in this regard over the next 5 years. There should be a strong airline that can develop hub operations; There should already be several well-developed regional corridors from this airport; The locations should be such that international to regional flight transfers can be made frequently and cost effectively; and The airport must have capacity for expansion. In this respect a preliminary recommendation is made based on the data available, to study the following gateways as potential regional hubs: Colombo, which has the largest amount of turnover of international and regional passenger combined and is the base for Sri Lankan Airlines; Delhi, which has the largest number of all passengers movements, including a wide network of domestic corridors and is the home to Jet Airways and Sahara Airlines; and Mumbai, which handles the largest number of international passengers in the region and has a strong domestic network and is home to Indian Airlines that is now to be merged with Air India, the airline that serves domestic and regional routes. And potentially in the longer term future; Dhaka, which is an Eastern Gateway to SAARC region and which is home to Biman Airlines; and Islamabad or Karachi or Lahore with more regional and domestic operations with Pakistan International Airlines as a promoter. It will also be strategic to initiate as many direct routes between SAARC capitals and major gateways in the region in order to improve the Directness Index. For instance there are many possible services, such as the following a route between Male Colombo Buddhagaya - Kathmandu to cater to tourists who may wish to have different holiday experiences, as well as to promote inter-regional tourism and trade. Such a flight could be scheduled to coincide with connections to Delhi, Karachi and Mumbai from Colombo as a hub. Similar arrangements at other hubs may also be possible.

12 1.7 Skilled Persons for Aviation Industry Because of the rapid development of the aviation industry, there is a need to develop regional training facilities for all grades of skilled persons. Airline pilots, flight engineers, ATCs, managers and logistics experts will be required to manage the expanded systems. 2 Description of Gateways 2.1 Dhaka (Bangladesh) Along with Zia International Airport in Dhaka there are 7 other conventional full-scale airports in Bangladesh. In addition there are 5 domestic airports. At present, there are air service agreements for all SAARC countries, except the Maldives. However operations from Dhaka are only to three countries and five destinations Kolkata,Delhi, Mumbai, Karachi, and Kathmandu. A total of 64 flights a week are operated between these airports with average load factors of 60 to 70 percent. Flights to Colombo and Paro were discontinued a few years ago due to commercial reasons. The ageing aircraft of Biman Bangladesh Airlines are reported to result in regular flight delays. In addition, Bangladesh has bilateral agreements with 38 other countries, of which 24 destinations are presently served. Dhaka - Chittagong and Dhaka- Sylhet are popular domestic routes, each having over 50 flights a week. Biman Bangladesh Airlines (BBA), the state-owned airline company, operates flights on all established domestic routes, as well as its international flights. GMG Airlines is privately owned, operates domestic flights within Bangladesh on all established routes and has recently started limited international flights in the SAARC region. The Dhaka Zia International Airport has two international and one domestic terminal. It has a runway of 3,200 x 46 metres. The airport extended its passenger terminal facilities recently and some additional passenger and cargo handling equipment has also been installed. This has resulted in improvements in both passenger and cargo handling and processing. A new warehouse has been built for better handling of export cargo. The airport handled 3,102,708 passengers in Physical Barriers There is scope for expansion by means of another runway at Dhaka. The fleet of F-28 aircraft are old with spares not being available. This is indicated as the primary cause of flight delays and cancellations. Non-Physical Barriers The airport has not yet developed modern passenger processing techniques such as green channels for cargo inspection. Measures to Address Barriers

13 In order to improve the services and for better maintenance, the Government has decided to engage the private sector in developments at Zia International Airport (DAC). There is a program for replacement of CVOR by DVOR and installation of new DME. A new terminal is being developed for export cargo at Dhaka. 2.2 Paro (Bhutan) Bhutan has only one airport, located in Paro. It is about 2,200 metres above sea level and is about 65 kms by road south-west of Thimphu, the capital city. The airport has a single runway with a length of 1,985 metres. The high mountains that surround the Paro valley impose severe approach restrictions making the Paro Airport entirely dependent on visual flight rules (VFR) and effectively limiting airport operations to daylight hours. The airport is also closed during rainy or cloudy conditions, which often occur during the monsoon season. Strong winds in early spring also make it necessary to confine all take-off and landing activities to the early morning hours. Furthermore, the need for steep climbing after take-off makes it necessary to reduce aircraft payloads in response to temperature changes. The result is that severe delays and disruptions to scheduled services are often unavoidable. Druk Air flights are often diverted to Kathmandu or Kolkata, sometimes with delays of days rather than just hours. Given the various constraints aircraft utilization is estimated at only 3-4 hours a day, compared to global average of 15 hours a day. Bhutan has bilateral ASAs with India, Nepal and Bangladesh but has no air links with Pakistan, Sri Lanka and the Maldives. Following the signing of the ASA with India in 2005, it was agreed that India would allow Druk Air to operate flights to Mumbai, Chennai and Guwahati. The agreement also allows Druk Air to fly to Singapore and Dhaka after intermediate stops in India. The 2005 agreement provides Druk Air the opportunity to expand its flights to and from India from 12 to 49 flights a week. However, only 11 flights including the three through Kathmandu operate at present. Druk Air is the designated airline of Bhutan. It has a limited fleet of older and smaller aircraft. The ASAs grant airlines reciprocal rights to operate flights in and out of Bhutan. However, no carriers from other countries operate flights to Paro due to the low passenger volumes and the operational limitations of Paro Airport. Physical Barriers The main constraint of the airport arises from its location. Since Paro Airport is located in a narrow valley surrounded by mountains, it can handle only smaller aircraft that can adjust to the highly restrictive approach to the airport. Due to the absence of instrument landing facilities, the airport operates only in daylight hours and during favourable weather conditions. Studies estimate that the airport can be used for only 300 days a year and remains inoperable for the remaining 65 days due to unfavourable weather conditions arising from low cloud cover and rain. As most of the above problems are associated with the physical geography and topography as well as climatic conditions, the solution is to build an alternative airport with instrument landing facilities and provisions for landing during the hours of darkness. The options for

14 another airport where such conditions exist are to be explored at locations in south central part of Bhutan. While airport handing is reasonably quick and efficient with one plane, the services can get stretched when two planes (with about 200 passengers) either take-off or land at short intervals. The terminal gets crowded, visa counters are inadequate and the luggage conveyor belt is not large enough to accommodate the baggage for such groups. There is also a need for extra processing counters to handle large groups of passengers. Non-Physical Barriers There are difficulties for passengers in purchasing Druk Air tickets in other SAARC countries other than in India and Nepal due to lack of interline ticketing arrangements. Measures to Address Barriers In July 2005, Bhutan announced that a feasibility study for the establishment of an allweather international airport at Gelephu would be conducted. In addition, feasibility studies for regional airports in Bumthang in central part, Phuentsholing in the south and Yongphula in eastern Bhutan are also to be undertaken. The studies are expected to commence in The only confirmed sector development in relation to infrastructure is the extension of the runway at Paro Airport by 160 meters and 120 meters on either end. This extension is needed to further ensure the landing and take-off safety of larger aircraft, like the Airbus A319. Once completed, it will help to ensure greater degree of safety. 2.3 Indian Airports There are 14 airports providing gateways to SAARC destinations. Although there are 61 airfields in the country capable of supporting operations by B aircraft, the top 10 airports handle 85% of the traffic. The concentration of traffic on Mumbai and Delhi airports in particular presents an imbalance - 52% of the national traffic. Chennai, Kolkata and Bangalore airports account for another 22% of the traffic. The 9 aviation gateways in India selected for this study are as follows: Delhi; Mumbai; Chennai; Kolkata; Trivandrum; Bangalore; Cochin; Hyderabad; and Trichy. India has ASAs with all of the other SAARC countries. This allows for the airlines designated by Sri Lanka daily services to 6 metro cities of Delhi, Mumbai, Chennai, Bangalore, Hyderabad and Kolkata and unlimited access to another 18 tourist gateways in India namely, Patna, Lucknow, Guwahati, Gaya, Varanasi, Bhubneshwar, Khajuraho,

15 Aurangabad, Goa, Jaipur, Port Blair, Cochin, Thiruvananthapuram, Calicut, Amritsar, Vishakapatnam, Ahmedabad and Tiruchi. The Air Services Agreement with the Maldives entitles both the countries to 1,800 seats per week in each direction, of which 200 seats are outside the bilateral entitlement. Recently the designated airlines of Maldives have been permitted to operate 7 flights per week to Chennai and Trivandrum, but as yet there is no service from the Maldives side. The Air Services Agreement between India and Bangladesh entitles each country to 30 services per week in each direction to the specified points of call Dhaka and Chittagong in Bangladesh and Kolkata, Mumbai and Delhi in India. Presently, Indian Airlines operates 3 services per week and Bangladesh Biman 24 services per week i.e. 2 services per week each to Delhi and Mumbai and 20 services per week to Kolkata. In addition, GMG Airlines operates 6 services a week to Kolkata. The Air Services Agreement between India and Pakistan allows the Indian Airlines and Pakistan International Airlines to operate 12 services per week on three designated routes; (i) Karachi and Mumbai; (ii) Karachi and Delhi and (iii) Lahore and Delhi. Presently PIA operates 3 services per week between Karachi and Delhi, 4 services per week between Lahore and Delhi and 5 services per week between Karachi and Mumbai, i.e. its full entitlement. Indian Airlines is operating only 2 services per week between Delhi and Lahore. The Air Services Agreement between India and Nepal entitles each country to operate 6,000 seats per week in each direction with Delhi, Kolkata, Mumbai, Patna, Varanasi, Bangalore and Lucknow as points of call in India and Kathmandu and 3 other points to be specified for Nepal. Bilateral air services agreement between India and Bhutan allows the designated airlines of Bhutan to intermediate 5th freedom rights to Kathmandu and beyond 5th freedom rights to Singapore, Dhaka and Bangkok. It is also agreed to add Guwahati as a point of call in India with beyond fifth freedom rights to Bangkok. Gaya already exists as a point of call in India for the designated airline of Bhutan. Flights to these agreed additional points are yet to be developed. Under the current arrangements, the frequency of flights per week has gone up to 49 from 12 all operated by Druk Air of Bhutan. The Indian carriers are entitled to 49 services per week but there is no operation by any Indian carrier yet. The designated airlines of India are Air India, Indian Airlines, Jet Airways and Air Sahara. According to the present policy, only airlines with 5 years continuous experience in the domestic sector and minimum fleet size of 20 aircraft are permitted to operate on international routes. A number of domestic airlines have come up in the last few years. They will have to fulfil the requirements before they are considered for international operations, including on SAARC routes. The Indian Country Report does not identify barriers by airport. As such, all Indian Airports considered in this study will be described together. Physical Barriers It is estimated that by 2010, international passenger figures will go up from the present level of million to 35 million. Similarly for the domestic sector, the figure is set to rise from

16 20 million at present to 59 million in While the potential for growth in the civil aviation sector, both domestic and international, is immense, there are infrastructural hurdles that could stand between the potential and the actual achievement. The most significant of the physical constraints is the capacity for aircraft parking. As against current availability of 141 parking bays for domestic operations and 73 parking bays for international operations, orders placed by all airlines put together are 284 for domestic and 118 for international operations. Table 7: Passenger Capacities of Selected Indian Airports and Present Demand Name of the Airport Airport Code No. of International Passenger Terminals Annual Capacity of each Terminal (in million) No. of International Passenger per year* in wards/out wards (2004) Mumbai BOM 3 (S) ,499,862 Delhi DEL ,694,582 Chennai MAA ,346,019 Bangalore BLR ,206 Kolkata CCU ,555 Hyderabad HYD ,072 Trivandrum TRV ,516 Cochin COK 1 NA 1,006,072 Table 7 shows that Bangalore and Hyderabad airports are already saturated for the present levels of passenger handling. Several others will reach passenger handling capacities saturation over the next 5 years. Table 8 gives the corresponding values for freight handling. In this case there are no immediate capacity problems in the short term. Table 22: Freight Handling Capacities of Selected Indian Airports and Present Throughput Airport Airport Code No. of International Cargo Terminals Annual Capacity of each Terminal MT Sq. meters of each terminals Tonnage Throughput per year (in MT) (2004) Mumbai BOM 1 407,000 47, ,265 Delhi DEL 1 660,000 45, ,923 Chennai MAA 1 230,000 23, ,443 Bangalore BLR NA NA NA 64,433 Kolkata CCU 1 146,000 5,000 30,529 Hyderabad HYD NA NA NA 13,924 Trivandrum TRV NA NA NA 22,287 Cochin COK NA NA NA 18,210 Due to runway and ATC constraints (Delhi and Mumbai airports have single runways); the number of flights that can be handled per hour at major airports is lower than the international standards. As a result, there are frequent delays at airports, particularly during the peak hours. Non-Physical Barriers The non-physical barriers identified in the country report were as follows: There is a shortage of pilots and flight engineers to keep pace with the anticipated growth. This is already apparent, but could be exacerbated by the scorching pace of growth;

17 The airport charges are higher in India compared to the charges in the nearby regions. Although low cost airlines have made an entry, the tariffs offered by them are not as low as those offered by low cost airlines in the Gulf and South East Asia; and The average import dwell time in the international cargo terminal is about 185 hours, which is on the high side. There is no green channel facility at the Cargo Terminal for cargo movement, including those to SAARC countries. Only the cargo coming in from the Export Processing Zone/100% export unit is not examined by the Customs. Measures to Address Barriers Significant efforts have been made to modernize and enhance the airport infrastructure. Two Greenfield airports at Bangalore and Hyderabad are under construction and are likely to be completed by Final decisions on the restructuring of Delhi and Mumbai airports are expected shortly. The other projects currently underway are shown in Table 9. Table 9: Development Projects at Indian Gateway Airports Airports Delhi Mumbai Chennai Kolkata Status New International Terminal Complex Phase II will be completed. Installation of automatic storage and retrieval systems for import handling in conceptual stage. New conveyor belt for cargo handling also in conceptual stage. 6 parking stands to be added by October 2006 International courier terminal in tender stage; new heavy cargo wing and common user domestic cargo terminal in design stage. New automatic storage and retrieval system for import handling in conceptual stage. 7 parking stands to be added by June 2006 New International Terminal Complex Phase II will be completed. Integrated Cargo terminal Phase III for imports in planning stage. Construction of a common user cargo terminal for domestic use in design stage. 3 parking stands to be constructed by July New International Departure building is to be constructed. Apron extension. Metro link over head corridor is to be constructed. New Integrated Cargo Terminal- Phase I under construction State-of-the art centre for perishable cargo to be constructed. New automatic storage and retrieval system for import handling in conceptual stage. Trivandrum New International building is to be constructed. Bangalore Expansion and modification of terminal building to be completed. Greenfield airport Hyderabad Extension of apron. Extension of arrival reminal. Greenfiedl airport Cochin International Privatise the Airport In addition to these, mechanization of cargo handling with implementation of ICNS and web based EDI & and bar coding is in progress at all metro airports. It should be noted that the Indian Government has approved the privatisation of the main airports on the basis of concession agreements. Under these arrangements the concessionaire will be responsible for all airport infrastructure development on a BOT basis. Tendering has been completed for both Delhi and Mumbai airports. In addition the Government of India is attaching importance to the following developments of the aviation sector: 1. Adoption of a comprehensive Civil Aviation Policy 2. Augmentation of Airport Infrastructure a) Greenfield airports at Bangalore and Hyderabad. b) Restructuring of Delhi and Mumbai airports.

18 c) 30 smaller cities identified as candidates for Public Private Partnership airport projects. 3. Augmentation of manpower a) Capacity enhancement for pilot training A new National Flying Training Institute has been proposed at Gondia. b) Continued Government assistance to Flying Clubs/Aero Clubs. 4. Strengthening public sector airlines Air India and Indian Airlines with induction of new modern fleet. 5. Encouraging Indian carriers to optimally utilize the bilateral traffic rights to various countries. 6. Gradual liberalization of the bilateral traffic rights with foreign countries on key traffic routes. 7. Gradual liberalization of the charter regime. 8. India has a unilateral Open Sky Policy for cargo and is encouraging other countries to also allow reciprocal open sky rights for cargo movement to the Indian carriers. 9. Encourage competition in all aspects of air services so that the traveling people have greater choices available at affordable cost. 10. Ensure a Sound Safety and Security System in Civil Aviation. 2.4 Male (Maldives) Aviation is the most important mode of travel between the Maldives and other countries. However, the Maldives is connected directly by air to only two of the SAARC countries. The established air routes are between Maldives and Sri Lanka, and Maldives and India, by Male Colombo and Male Trivandrum routes respectively. Malé International Airport is the only airport serving international passenger flights at the moment. The main runway at Male International Airport is 3,200 metres in length and has a peak hour landing and takeoff of 20 flights. One of the domestic airports, Gan Airport, has now been upgraded and renamed as Gan International Airport and it is now ready to service international passenger flights, but as yet there are no such services. The Male International Airport is located in Hulhule Island near the capital Male serviced both scheduled and chartered flights from 36 airlines in As the country s biggest industry is tourism, flights from Europe, the Far East, Asia and Middle East are frequent with over 700,000 travellers from various countries using the airport in The domestic passenger traffic is smaller and amounts to about 300,000 passengers each way. The Maldives has entered into ASAs with Sri Lanka and India. There are more than three daily flights operating on the Male - Colombo corridor. The two established airlines, Sri Lankan and Emirates operate 54 flights weekly in this route with an average occupancy of only 57 %, which is quite low in international terms mostly due to flights coming from Europe and Middle East serving both Male and Colombo. On the other hand, the Colombo - Trivandrum corridor has seven flights every week operated by Indian Airlines in each direction with seat occupancy levels of over 80 %. It should be noted that during the holiday season the occupancy is 100 % for several days with waiting lists for flights. The main reasons why passengers travel on this route are for medical, studies and holidaying purposes. However, the fact that Air Maldives the designated airline of the Maldives does not operate to any international destination does not give the Maldives adequate leverage to respond to demand increases.

19 On the other hand over 4,500 domestic flights were operated by the state-owned Island Aviation Services between the four domestic airports and the Male International Airport in the year There were over 60,000 flights by sea planes operated by two private companies, between the float plane platforms of the International Airport and the resort islands. Physical Barriers There are delays at times during security screening when the number of passengers to be processed exceeds three flights concurrently. The terminal at these times becomes congested and lacks proper services. The forecasts show that with traffic increases in the near future, the existing terminal building will be too small to meet the anticipated demand. With regard to freight, the cargo handling area needs to be expanded with additional infrastructure. There is no green channel. The limited processing space for the import cargo and export cargo is the main problem identified. As there are significant amount of perishables imported from the India and Sri Lanka, and frozen fish is exported to Sri Lanka and other countries, an appropriate cold storage area was also identified as being required. Non Physical Barriers The passenger traffic between the two gateways, Colombo and Trivandrum, is operating with high occupancy levels. The service between Trivandrum and Male in particular needs an increase in the capacity by having additional flights. It should be noted that this should be done at least for the peak seasons. Measures to Address Barriers As the tourism sector continues to dominate the Maldivian economy, development of the aviation sector is vital. The international airport in Hulhule island had several development plans and continues to implement them. A Master Plan is scheduled and the bidding process is underway now. The terminal building is now being shared for both the domestic and international flights and the cargo terminal is operating in excess of its design capacity. Under the ongoing development projects in the airport, the following services are planned to be developed or to be rebuilt: An Extension of the Departure Terminal; A new Domestic Terminal; A Control Tower, including new Air Traffic Service Building; A new power station with new HV distribution network; and Extended range VHF communication system Kathmandu (Nepal) Nepal has only one international airport in Kathmandu - the Tribhuvan International Airport (TIA). The runway dimensions are 3300 x 45 metres. Flight operations are mostly confined to daylight hours, though recently flights have begun operation after 18:00 hrs. The Civil Aviation Authority of Nepal has developed a modern cargo complex for import and export traffic. This terminal is 7,700 sq. meters at ground and level with 2,500 sq. meters at a second level, totalling10,200 sq. meters. The full design capacity of the terminal is 24,000 tonnes

20 exports and 12,000 tonnes imports. It is anticipated that this will be sufficient to cope with the demand for the next 10 years. The passenger flows exceeded 1.5 million in 2004 and the cargo movement from the airport reached almost 19,000 tonnes in There are six regional corridors from Kathmandu - namely to Dhaka, Kolkata, Paro, Delhi, Mumbai and Bangalore. The most popular corridor is with Delhi having 40 flights a week in each direction followed by Dhaka with 9 flights. The designated airlines of Nepal are Royal Nepal Airlines and Cosmic Air. Physical Barriers Through there is sufficient capacity at the passenger terminal at TIA the current scheduling leads to delays and a negative image, in particular, to international passengers. The procedures of X-raying on entry, the payment of airport tax, immigration, and x-raying prior to the gates all result in long queues at peak times of activity, whereas at other times the facility is almost unused. In addition, there is a shortage of gate lounges during these peak periods. This will constrain future growth unless rescheduling takes place or practices are changed. Non-Physical Barriers The country report has not identified any specific non-physical barriers, though it should be recognised that the queuing problem is as much non-physical as physical. Measures to Address Barriers The airport has sufficient capacity to handle the forecast traffic provided that the load could be spread more evenly over the day. The current congestion problems arise due to the concentration of flights between hrs. Whilst it is recognised that some timings relate to connectivity through hub airports such as Bangkok, nonetheless there should be some scope to spread the loadings. The passenger terminal is not of a modern design sufficient to handle tourist traffic in particular. In addition to resolution of the queuing problems above, the layout and facilities within the main passenger departure area are poor and underutilised, whereas the boarding gate area is overutilised. Thus, there is some scope for replanning the layout to make it more effective. 2.6 Karachi & Lahore (Pakistan) Currently among the 25 operational airports, Karachi and Lahore serve as the main hubs for air travel activities involving international/domestic traffic, followed by Islamabad, Peshawar and Quetta. Modern airport terminal complexes at Karachi and Lahore have been developed on the concept of satellite systems as far as infrastructure facilities and services are concerned. Karachi has two runways of 10,500 feet by 150 feet and 11,155 feet by 148 feet. Lahore also has two runways 10,860 feet by 151 feet and 9,515 feet by 151 feet respectively. Pakistan has ASAs with India, Bangladesh and Sri Lanka. It operates flights to all three countries. Pakistan International Airlines is the designated airlines of Pakistan.